Uncertainty over future of local stores as Debenhams considers CVA
DEPARTMENT store giant Debenhams faces an uncertain future after auditors KPMG were called in to help draft emergency plans to save the troubled retailer.
The store, which has five outlets in Northern Ireland at Belfast, Derry, Craigavon, Ballymena and Newry, is said to be considering a list of options including a company voluntary agreement (CVA), a controversial insolvency procedure used by struggling firms to shut under-performing shops.
If Debenhams charges ahead with a CVA, it would join a raft of retailers including New Look, Carpetright and Mothercare, who have opted for the restructuring tool despite anger from landlords who have argued it leaves them out of pocket. The news sent shares down more than 17 per cent in morning trading.
When asked if there were plans to close any of the Northern Ireland stores as part of the process a spokesperson for the company said:
"We have no announcements to make on any store closures in our estate."
"Like all companies, Debenhams frequently works with different advisers on various projects in the normal course of business," they added.
Debenhams has said it expects full-year pre-tax profits of around £33m before exceptional items, which is within the current market range of £31m to £36.5m.
Underlying earnings are forecast to come in at £157m, with net debt of approximately £320m.
Chairman Ian Cheshire reiterated that the board is continuing to work with its advisers "on longer term options, which include strengthening our balance sheet and reviewing non-core assets".
In January Debenhams announced plans to ramp up efficiency savings, with another £10m earmarked for this financial year and £20m extra annually.
Chief executive Sergio Bucher, who is leading the shake-up, then went on to slash 320 store management roles in February.
In June, the company issued its third profit warning this year as trading came in "below plan", while last month the company said it would swing the axe on up to 90 staff at its fashion and home departments as part of the cost-cutting drive.
Debenhams is also the subject of takeover talk, with speculation building that Mike Ashley is set to merge it with his newly acquired House of Fraser. Mr Ashley owns just under 30 per cent of Debenhams, close to the threshold at which he must launch an official takeover bid.